tv All In With Chris Hayes MSNBC August 6, 2013 8:00pm-9:01pm PDT
engaged in an awful lot of bipartisan negotiations in his time in the senate, which included the '80s and the '90s, where that was much more common. nowadays those kinds of moves do sometimes provoke real criticisms from your side. if you're seeing fraternizing with the other side too much. >> i think booker has essentially predicted that's what he's going to do.
but i'd submit -- we'll discuss that tonight. but first did anything interesting happen where you work yesterday? >> sold to amazon founder jeff bezos. >> everybody at the top of the "washington post" company had the same reaction when we first started to think about the possibility, which was great surprise. the reason we started to think about it is the point of our ownership was it was always supposed to be good for the post. we knew we could keep the post alive. we knew it could survive. but our aspirations for the most
have always been hired by that. so we went to see if we could find a buyer. i have spent 42 years of my life working in this building. basically all of my working career. and i'm really devoted to its future and success. >> that's don graham. don graham is the grandson of eugene meyer, who bought the "washington post" in 1933. he's the son of -- he now runs the "washington post" company. he loves the company. he's an amazing, amazing leader. that's don graham saying he's selling the newspaper his family built to amazon founder jeff bezos and he's doing it.
he's doing it because he thinks it is necessary for the institution to thrive because the business model that was built around that paper, around the "washington post," that that business model is failing faster than the company's finances can support. that sale was announced on monday afternoon. i was hosting here monday night. i didn't talk much about it on the show because it was honestly just too new and i was a bit too shocked and too close and i hadn't had time to process it and figure out what it meant. and i think everybody in the post, certainly everybody i've spoken to, felt the same way. this all comes, by the way, it comes the same week that "newsweek" and the "boston globe" got sold for fractions of their value ten years ago. and i want to talk about these sales for a minute i don't want to give you a big speech or big take. i don't have great solutions. i'll admit that up front. i just want to talk about it because i think this is a moment for people to kind of sit up and really take a look at the often invisible architecture that undergirds and genuinely shapes -- it actually shapes
pretty much all the information we get in this country, not just from newspapers but even all the way up to google. i want to start here with a bit of a story. i went to work for the "post" in may of 2009. so i've not been there that long. just four years. you walk into that building, or i walked into that building, and it's not the prettiest building in the world. i love that building, but it's kind of an ugly building. they're actually looking to sell it. it's on 15th and l streets in washington, d.c. but you walk in and you see this big typesetting machine. and the history, it just crushes down on you. you see these framed papers, like from the day president richard nixon resigned, and you realize that in this building people acted to change the course of american history and news reporting and even letters. and i can't tell you how intimidating and inspiring it
is. and still today. but when i got there in 2009 the atmosphere was unreal. it was like a funeral. that's because there were these little funerals happening across the newsroom all the time. you would hear somebody tapping a microphone and speeches and clapping and then everyone would get a piece of cake and some 15-year veteran of the industry would walk out the doors for the last time onto 15th street. and this would happen sometimes four or five times a day. the recession when i came had just destroyed print advertising and the internet had disrupted the whole business and we were in our fourth round of buying out these really great journalists, giving them money to leave so we didn't have to pay them to do journalism anymore because we couldn't. one of my first weeks there i was in the elevator with one of the managing editors and i nervously made some dumb joke about all the cake around the newsroom. and he told me that in the last round of cost cutting we'd had to cut the cake budget. we'd cut the cake budget because
we were spending too much on cake. i remember thinking to myself, i really got into this media thing at the wrong time. and what was happening there was that this kind of unholy business model journalism was breaking down. we ran a business where people paid us to run ads saying they had a used piano they wanted to get off their hand, or there was a job open for a gym receptionist or a department store was having a sale on shoes. we took that money and used it to investigate the president of the united states. that work we did, that investigating of the president, was so unbelievably important. i mean, it's easy now to look back on watergate and just let it fade into the inevitability of history, to just write it into the fabric of our past as if the garment could have only come out one way, but it didn't have to happen. that was a war. and it was a war with the white house that "the washington post" was proving that karl bernstein and woodward were proving day by day were thuggish and would stop at almost nothing to destroy political threats.
>> the pressure got very, very tough. they would attack our credibility on every level, and they wouldn't answer phone calls from "the post." they were told not to speak to our reporters. what was rather ludicrous they were told not to come to dinner at my house. >> that was katharine graham herself speaking about the pressure coming from the white house during "the post" reporting on watergate. and she wasn't exaggerating. here is president nixon giving some of those very marching orders to his press secretary ron ziegler in 1972. >> i want it clearly understood that from now on no reporter from "the washington post" is ever to be in the white house. is that clear? >> absolutely. >> never in the white house. no church service. you tell connie, don't tell mrs. nixon because she'll approve it. no reporter from "the washington post" is ever to be in the white house again. and no photographer either. no photographers.
is that clear? >> yes, sir. >> none ever to be in. now that is a total order and if necessary i'll fire you. do you understand? >> i do understand. >> okay. all right. good. >> okay. >> thank you. >> there's this great moment from that period where one of nixon's aides tells karl bernstein that katie graham, the publisher of "the post" is going to get caught in a big fat wringer if that story is published. we published that quote or most of it anyway. >> he was talking to a reporter? >> i think i woke him up. >> good notes? >> verbatim. >> you really said that about mrs. graham? print it. it's a family newspaper. >> this was a business model. we were taking money from the most mundane local transactions from being the way a city's commerce communicated with
itself and using it to fund this incredible, dangerous, high-flying history changing journalism. the money that macy's was giving us to advertise sale on dresses was sending reporters to vietnam. it was weird. and with the advent of the internet and craigslist and all the rest of it, it began breaking down. but here's the thing. what wasn't really sending anyone to vietnam were subscription fees, and this is kind of the dirty secret of not just the news business, which is we don't pay for it. the consumer doesn't pay for it. it's not like the business model for candy bars or tvs or purchases of candy bars and it tv fund the production of candy bars and tvs. it's paid for typically by advertisers or by rich people. either because a rich person owns it directly or a rich person donates to the nonprofit that owns it. this is true for newspapers, but it's also true 30 for magazines and it's true for radio. it's true for cable news like this program.
you'll see it when we go to commercials in a few minutes. it's true for search engines like google and yahoo! it's true for facebook. think of how often you use a search engine like google. isn't it odd that you've never sent them a check? they're woven into the fabric, if not your life, certainly mine and most of the people i know. i don't think i would survive ten minutes in my job if i couldn't search the net. it's vital to me. perhaps the most vital services in my life and i don't pay a dime for it. it's not free. they're just selling me and you to advertisers and on some level god bless those advertisers and god bless the families like the grahams and the family that owns "the new york times" and maybe jeff bezos who funded this. but for all that when you back up, when the machinery comes clear like this and you begin to see it break down, when you have to see and hear about the business model, it's not exactly comforting or pretty. it means the directions in which our informational services
evolve from our news to our search engines, those are the directions of appealing to advertisers or to rich ben factors. >> a number of years ago eric schmidt, the head of google at the time, the ceo, was here talking. and i said, well, it's going to be on your tombstone that you killed newspapers. and he said, what do you mean? i love newspapers. and i said, well, you've taken all of our money. all of our ad revenue and like a good ceo he said it's our money now. and this is all about money and "the post" used to be this cash cow from the advertising revenue. it shifted to the internet and we can't compete. >> that's bob woodward, of course. and we don't know, i think, what our informational commons would look like if it was supported by the people who use it or support it through some other mechanism than the ones we have. you can take this one example wikipedia supported by the people who love it.
they don't pay many employees. look, i'm not coming here to you tonight with some big solution. i don't know how to fix it. i work for "the post." i hope jeff bezos is as good as don graham thinks he'll be. i trust his judgment on this. i think a lot of us do. this is a fragile foundation on which we've built our informational world, a foundation built on a business model that never made all that much sense. it was unique in its own way and it is now kind of failing and then the foundation of rich people who have maybe a lot of good intentions but their own interests and their own quirks and it's on this foundation, it's on this foundation that we've chosen to place almost all the information that we need to operate as a society. what does it mean for the future on how we get information when they are being bought up by all your important legal matters in just minutes. protect your family... and launch your dreams.
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it's a bad time for newspapers as you all know. the news hole is shrinking as advertising dollars continue to decline. you're circulation numbers are also down as we compete with a variety of media. technology is driving distribution and the internet is a free source of news and opinions. >> that was a scene from "the wire" i will try to get into any broadcast i ever can in which the editor of "the baltimore sun" tells the staff that because of the internet the paper will have to make budget cuts. we're discussing the future of
journalism and trying to under the path of the industry considering how much it has changed on the introduction of digital media. joining me now is michael moynihan, editor for "the daily beast." jay rosen at knock university and author of a web log about journalism and john cassidy, staff writer at the new yorker and a columnist at "fortune" magazine. jay, jeff bezos is a guy who owns a literal rocketship company. he has a company that makes rocketships. he has a clock that is going to run for 10,000 years in the can desert. and he owns amazon. he's a distributor of industries and now he is buying one of these gatekeeper players, an entrenched institution that's been around for a long time. the kind of thing that in other times he disrupts. why do you think he's buying "the post"? >> i think it tells you about the scale of the ambition this generation of entrepreneurs have. i don't think they're simply interested in building huge businesses and dominating
markets, they want to actually change the way we do things. and if it can be done better, it should be done better, is sort of the mott the toe of the geeks in silicon valley. and i think for me as i reflected on why bezos would want to do this, some of the things you mentioned came up, the fact that he wants to go into space. the fact that he wants to go into the future with his clock. and in some ways with "the washington post" what he's doing is buying this connection to the past as you emphasized in your intro. so, for me, what stands out about this purchase is this is a man who wants to do a lot more than sell books and garden tools to americans. he wants to change the current of his time. >> and, john, you had this post at the "new yorker." the sale is based on what he can do for "the post" and this long-term profit instincts and your view of it was you call it more cynical, more realistic, but why do you think he's buying it?
>> i called it skeptical. i've had a lot of people like you from "the post" quite understandably saying and wishing him good luck and he's going to invest heavily in the paper. it looks like it could be a savior coming in. but i thought it may be time for somebody like myself to just stand back and say, look, maybe "the post" can do something for him as well. this is not just some guy off the street who is buying the paper. he runs the biggest online retailer in the country, a company that has a lot of business in washington. there's a bill before the house at the moment about sales taxes in the states which amazon has massive stakes in. there are antitrust inquiries, current, past and future which the company is going to be involved in. so i think, you know, it's legitimate to raise the question why he's buying the paper, does he have some interest? i don't know. i haven't had a secret interview where he said here is the real reason i'm buying "the post." but i think when any rich, well-connected, powerful businessman buys a newspaper,
it's incumbent on journalists to take a look and say what's he really up to? >> i think there ends up being this sort of -- "the daily beast" is driven by daily -- not daily -- barry diller who happens to be on "the washington post" board, i should mention. "the post" has been owned by the graham family who owned kaplan who had very significant interests pending before the u.s. government in terms of how they would regulate the education business. this world in which sort of billionaires or hundred millionaires buy up these big papers get a certain amount of influence in the national conversation and then have some amount of business interest. it's not new but it definitely seems to be sharpening. >> it's definitely into the new. as a matter of fact it's a rather old thing. >> right. >> i would say that now there are more checks on this than in the past. and i don't mean with regulations and legislation and such. but if you and if jeff bezos started invading the editorial room saying you have to run
these unsigned editorials will how the internet sales tax is going to destroy businesses, the backlash against that would be enormous. i don't think -- jeff bezos is a very clever guy and we've seen what he's done over the past 20 years, i don't suspect he would do something like that. you know, this -- i mean, we look at immediately when this happened my first instinct was to tweet, be very modern about this, to say let's find out jeff bezos' politics and attack them. that's the instinct these days. we always have this sort of mustache twisting view of the guy who comes in. but i, you know, would think that jay is right here. the fact he owns a company that makes rocketships means something to me and he wants to come in here and he said today that he was very reassured by the statement that he wants to keep the ethos of the paper and not intervene. i believe that's true. it's a hunch but getting deeply involved and being machiavellian about it, i don't suspect he'll do that for a variety of fairly
odd reasons. >> so this is a guy with essentially interplanetary ambitions quite literally. and one of the things i do find to be a signal of this kind of purchase is that in the past you've had these owners of these papers, in part due to the paper's business model which has been substantially local, who are deeply rooted in the community. the grahams are deeply in washington. jeff bezos lives in washington but not the one where the paper is. he lives in washington state. that to me does feel like something new and also something potentially important in terms of if you begin seeing sort of cross state or you could imagine international ownership of the papers. the local mission they play in addition to their prestige induced or prestige headlining national and international role. >> that's the most interesting thing. he didn't grow up in the shadow of "the washington post" and buying the hometown paper or the
hometown sports team. one of the interesting things about that amazon is very good at two things that are really important to the news industry. one is user experience. they are expert at making it easy for people to buy things. the user experience for news has never been all that good. it's not easy to find your way around "the washington post" website. >> hey. >> the other thing that amazon had to pioneer to be good at what it does is trust. if you don't trust that your transaction is going to go through, if you can't trust your credit card to amazon, you're not going to buy anything there. and trust is the coin of the realm in journalism as well. so the fact that he's not buying this to be a big player in town, he doesn't have a house that the power players in washington can come to and gather around his dinner table. it means that the focus is going to have to be on the product, on the journalist,s and one hopes on the users.
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talking about the future of the news business and who owns it. still with me are michael moynihan from the daily beast, jay rosen and, john cassidy. john, i want to go to you. one of the things when you see these sales over the last week, for a time you could forget how the media was funded. it somehow got to you every day and for a while you could just
read it online and it was like a fact of life. i think now we're seeing there's actually a business model, right, and the business model in many cases is failing. >> sure. >> and as the business model fails, it changes either who owns it or how the news is delivered. i mean, you see on a lot of websites advertising or advertising is harder to distinguish from the actual content and it's an enormous amount of our informational resources. >> "the washington post" sort of embolizes the old model. they could go national. they rely on local advertising and really dominate the washington market which they've always done in northern virginia and maryland, et cetera. and that was an incredibly lucrative and rewarding business model for years. warren buffett bought in, made a fortune on the paper. the grahams became this great family and it's gone to hell because of the internet. everywhere else in silicon valley people are saying why
would you purchase a newspaper? that's dead wood. then along comes jeff bezos, you know, this little guy who is the great internet icon, and he says, no, wait a minute. this paper is worth $250 million. to me there's a sort of disconnect there and i don't know what the answer is. that's why i have my interview request in. what does jeff bezos say about this? what does he say is the business future of "the post"? not just the political future. >> and one of the genuinely fascinating things about the way this media has evolved is that people just don't pay for it. we instituted a pay wall at the post a couple of months ago and there was a lot of sort of whaling and gnashing teeth. it's $10 a month. i have a lot of e-mail from readers who say i can't pay this. it's just not something i can manage. and i get that and it's actually
a fair amount of money, but it is at the same time the sort of fascinating bit of the world where i think the news and the way it pays, it's something they are not used to paying for it. it would be very weird, i can't pay for the food. i'd like to see some advertisements on the side of the candy bar and yet we've ended up in this place. that's the central weakness of the business model that we have not figured out either in the internet age but to a degree i don't think people before it how to get people to pay the cost of the journals they consume. >> there is no business model. if you look at a number of these pieces, my friend jack schaefer, wrote a good one for reuters, saying jeff bezos has this amazing ability to spin technology and he's an alchemist and maybe he can bring that to "the washington post." a completely fair point. it's not saying he is coming with "x" business model and i'm very excited about it saying, well, the guy who ships things the next day to you hopefully can apply something to the news. it's kind of crazy when you think about it. you see "the atlantic."
a good example of this. a good magazine, a great website, one i visit every day, desperate in some ways. granted, they do other things. they have events that make them a lot of money. desperate in some way they were doing this sponsor content. they were trying this out. one of the big ones they did was the scientology. >> and they're still doing it. >> the scientology one paid for by the church of scientology, and it looked like an "atlantic" piece and it was labeled and clear when you read it that it was an advertisement for scientology. bezos gets people to buy electronic books. you get free books on the internet. you paid for them, they are reduced. and online i talk to younger people and younger people in our newsroom, they find the idea of paying for news totally baffling and i read four print newspapers a day. i love print. i read books in actual book form. and i would be upset if this all went away. but i buy my news.
and it's a different world. >> let's remember before the 1830s news was limited to the commercial and trading classes because it was very expensive. and it wasn't until people cut the price making it not free but almost free that the whole idea that you could inform the great mass public came about. so there's a lot of value to free or almost free news. the value is that most of the public can read it. and while i certainly sympathize with you and your colleagues that you need salaries, you need to be paid, let's not pretend that there isn't huge public and social value to news that is freely available. >> and i think one of the great ironies of this period is at a time it's been very tough for many journalists it's never been a better time to be a news consumer through the amount of news you can now get which is more than at any other time. we're going to have to leave it there. michael moynihan, jay rosen, and john cassidy, thank you all very much for being here. and we will be right back. it starts with sometle, like taking a first step.
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the definition of the american good life anymore. and i'll explain why coming up. but first -- first -- i want to share with you the three awesomest things we saw today. we begin with a meteorologist who forget to rise with the sun. al roker has been delivering his trademark brand of weather forecast for nearly 40 years. in fact, al's presence on television has become so reliable, what happened today was a shock. al roker did not make it to his early, early, early morning television show. the weather channel's "wake up with al" was sans al when it went to air. after 39 years it happened, i overslept and missed the show. missed "wake up with al." will be on time for "today." he shook off the cobwebs and explained his tardiness to the world. >> my phone didn't go off and somebody said what's your backup? for 39 years i didn't need one. >> you missed "wake up with al" this morning? >> we changed the name to, al, wake up. >> we've all been there, buddy. the second awesomest thing, our future robot overlords will be
adorable. for years the trash compacting robot wall-e existed only in animated form. now moving and talking scale replica of disney's famous gear head. it was done by a charter member of the worldwide r2d2 builder's chub. he built wall-e to life completely from scratch. >> my right hand does all the driving and then my left hand manipulates the head. and so we can look about 270 degrees. he can pitch up, pitch down. we can move the eyebrows with the gear switch. and then, of course, i have remotes on the side that cue up the sounds.
not only does wall-e get to enjoy life on this earth as opposed to the garbage planet from the movie, dreamers of the world came to rejoice over the prospect of the cutest robot summit the galaxy has ever seen. and the third awesomest thing on the internet today, ten years ago auditions were held for the american version of the sitcom "the office" and now we can see what it would have been like if seth rogan got the part of dwight instead. >> urine is sterile. did you know that? if you're in the field, you can clean a man's wound by taking a wiz on it. that is in a book written by the red cross. >> you can see famous folks auditioning for "the office" like katherine hawn and adam scott who really would have made a pretty great jim. >> if we can supply it to them and if they can purchase it -- i'm boring myself just talking about it -- so that's, i can't -- i can't even.
>> you could have. and before steve carrel and michael scott they almost went to miss their shows, bob odenkirk. >> we play hard and we work hard. sometimes we probably play hard when we should be working hard. and that's probably my fault. fire me. >> die hard fans know he was actually cast in the role of michael scott before being yanked in favor of carrel. there's a that's what she said joke in there but i will leave that one alone. you can find all the links on our website, allinwithchris.com and we will be right back. ard. i missed a payment. aw, shoot. shoot! this is bad. no! we're good! this is your first time missing a payment. and you've got the it card, so we won't hike up your apr for paying late. that's great! it is great! thank you. at discover, we treat you like you'd treat you. get the it card with late payment forgiveness. "that starts with one of the world's most advancedy," distribution systems," "and one of the most efficient trucking networks," "with safe, experienced drivers." "we work directly with manufacturers," "eliminating costly markups," "and buy directly from local farmers in every region of the country."
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welcome to sunny phoenix, one of the epicenters of the foreclosure which is seeing a housing market recovery. it's for that very reason president obama chose phoenix as a backdrop for a big policy speech on housing and addressed an issue that doesn't get a lot of play from elected leaders or talking heads. renting a home. the president was greeted by jan brewer on an arizona tarmac. his prepared remarks made news even before he delivered them. the president endorsing a senate bipartisan plan to wind down mortgage giants fannie mae and freddie mac noting the days of a guaranteed government bailout are, well, not over but numbered. >> for too long these companies were allowed to make huge profits buying mortgages knowing that if their bets went bad taxpayers would be left holding the bag. it was heads we win, tails you lose. and it was wrong.
>> there's also broad five-point plan mr. obama advocating on behalf of responsible homeowners supporting a 30-year fixed rate mortgages. he even lobbied for immigration reform. after all, immigrants, you know, can buy homes, too. but there was a tension in president obama's speech, a tension we think is pretty interesting here. part of it was from the old hymnal where the very definition, the very definition of what it meant to succeed in america to achieve the american dream was to own a home. >> a home is the ultimate evidence that here in america hard work pays off, that responsibility is rewarded. you know, i think about my grandparents' generation. when my grandfather served in world war ii, he fought in patten's army. when he got back, this country gave him a chance to go to college on the gi bill but it also gave him a chance to buy his first home with a loan from the fha. to him and to generations of
americans before and since, a home was more than just a house. it was a source of pride and a source of security. >> that's talk we've heard for years. you might recall george w. bush's ownership society. but then the president addressed the fact not everyone can or even should buy a home and suggested a re-examination of current policy affecting renters. >> in the runup to the crisis, banks and governments too often made everybody feel like they had to own a home even if they weren't ready and didn't have the payments. that's a mistake we should not repeat. instead, let's invest in affordable rental housing. let's bring together cities and states to address local barriers that drive up rents for working families. >> those aren't big policies the president previewed in renting. they're not on the scale of, say, ending the fact that people who buy a home get a huge tax break and people who rent one get nothing. but there is evidence there is now finally friction around the idea every american should
always and everywhere be a homeowner. joining me is heidi moore a u.s. finance editor for "the guardian" newspaper. my friend mike consul with the roosevelt institute and chief financial and regulatory correspondent for "the huffington post." i wanted to begin with you. the five-point plan the president laid out today did, as a sort of coherent vision for where the housing market should go from here, did you think it helped? did you think it made sense? >> i mean, i think the plan makes sense. what i think you spotted the inherent tension in what he was stating in that there is this -- he mentions rentals as, you know, being kind of a decent, honorable thing that our society should encourage. however homeownership is the cornerstone of middle class life. i don't think the administration has come to grasp with how much they should encourage rentals and should direct homeownership. until they resolve that inherent
conflict i don't think they're ever going to be able to present a coherent and cohesive plan to attack the housing problems we all face. >> heidi, i feel there are two pieces to that inherent conflict. there is the political piece. homeownership is like the other thing. apple pie and you say mother and you say homeownership. and the policy piece of it. an enormous amount of what one could call the middle class is devoted to giving subsidies for homeownership. and kind of to get at the policy you need to get at the politics. and the politics on that are really nearly immovable. >> yeah. this is a huge fight that obama is picking and god help him in getting somebody on his side. it's true that there's a bipartisan bill introduced by robert corker that would eliminate fannie mae and freddie mac and the role is to guarantee mortgages so that people can have affordable mortgages. but the problem with that is if you eliminate fannie mae and
freddie mac where do you get mortgages? you throw them over to the banks and that's what obama wants to do. the banks aren't going to take that same kind of risk without that policy and that social aspect of needing to provide affordable homeownership. they just want to make a profit. >> to make that real tangible, mike, people at fannie mae and freddie mac, all these cute names for complicated housing agencies, but without fannie mae and freddie mac i think it's fair to say their prime contribution to american life the 30-year fixed rate mortgage would not exist in nature, it is too much risk. the private banks would not be handing these out to most homeowners that they essentially exist there. in a decision to the fact they give this big tax break for buying a house. you get this kind of government buyback of the loan which is what allows these incredibly long-term, stable, secure and
advantageous loans you could not get on the private market to exist. >> absolutely. you see every country has some form of market that our government involvement in the markets. i want to go back and talk about the rental. they play a very outside role in the rental markets. >> they are fannie mae and freddie mac. >> government supported entities. >> they play a very important role in the rental markets especially during a crisis is. they were back stopping 80%, 90% of the rental markets. this reform will impact renters as much as it impacts people who have a mortgage. now the 30-year fixed rate mortgage, there's a big debate whether that should exist going forward. that's one of the advantages to a 30-year fixed rate mortgage. it contains costs and makes costs predictable with volatile interest rates. it puts a lot of the interest rate risk on the government and on the banks and the people who own the instruments rather than on households which, you know, causes a lot of problems for households trying to balance financial risk, and it also by
spreading out the funding, it makes it less boom and busty. less likely to have these very short, jagged, subprime like loans with the constant resets. and a.r.m. rates. >> heidi, do you want to join in? >> it makes obama beholden to wall street and wall street is not ignorant of the market which has been growing and growing. >> what do you mean it makes them beholden? >> he needs the banks to cooperate with his plan. if he wants to get rid of fannie mae and freddie mac he needs the banks to take up all that have slack to potentially agree to accept losses on mortgages. one of the bills in congress right now, the senate bill, asks banks to take the first 10% of losses on mortgages. and you say loss 0 to a bank and they just have posttraumatic stress disorder about the financial crisis. they don't want to sign up for that if they can get a government subsidy. so he needs to convince them they're all on the same side, which they are not. and there's no enlightened self-interest he can really pitch to them to work with him. the other thing is that banks have not been ignorant of the power of the rental market that has taken over because it's so
hard for people to borrow for a mortgage. they've already started to securitize rentals. so what you see is that it's really hard to keep wall street at bay and keep the market for housing fully controlled. >> and i want to ask you about the big policy that dares not speak its name but i want to do it when we come back. screech ] [ beeping ] ♪ [ male announcer ] we don't just certify our pre-owned vehicles. we inspect, analyze and recondition each one, until it's nothing short of a genuine certified pre-owned... mercedes-benz for the next new owner. ♪ hurry in to your authorized mercedes-benz dealer for 1.99% financing during our certified pre-owned sales event through september 3rd.
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it's important for us to encourage homeownership, but a lot of people rent and there's nothing wrong with renting. we have to make sure we are creating affordable opportunities when it comes to rental properties. >> one of the things i find interesting about this whole debate is you have this situation where fannie mae and
freddie mac we've talked about a bit and they operate abstractly. many americans never come into contact with them. the policy that enrages me a bit and gets any economist you speak to mad is the mortgage interest deduction. and every american taxpayer knows about that one. it's incredibly, incredibly popular. i want to show you that graph. it's also to a degree people don't realize incredibly regressive. it's a huge benefit for richer people. it's almost nothing for poor people who don't intend to buy houses. what it means, in effect, poor people who are renting houses subsidize in taxes. it is this wildly popular part of the tax code that for all the talk of tax reform, for all republicans say about cleaning up the code and getting rid of these deductions, you never hear anybody even consider touching it.
>> well, you have to look at the interest groups that have a huge stake in this debate. the national association of realtors, the home builders, the bankers, even the banks themselves that dabble in real estate. it subsidizes a huge part of american housing. and for them, for policymakers to even consider scaling back the mortgage interest tax deduction would hugely impact the american housing market and all these related and ancillary industries. they're not going to want to give that up without a fight and so it's just too politically toxic in washington. >> i think that's only part of the truth here. we have a tendency to blame everything on interest groups, right? it's the bad interest groups keeping this policy but the american people, you polled the mortgage interest tax deduction, it's a whole lot more popular than anyone in washington is and it's connected to this cultural belief we have that fundamentally what is the american dream is getting to buy
your house and so the american government should be helping you achieve the american dream. so we end up subsidizing richer people. it's a perverse way our politics works on this particular issue. >> yeah, absolutely. the american dream is actually not the mortgage interest part but the tax deduction part. it's really hard to take away tax deductions from people and they like the idea that it's there for them theoretically even if they're not using it. and so it is almost seen as a perk, not quite an entitlement but the thing about americans is they always feel like they're going to move up through social classes and so they may not be using the tax deduction right now but they think one day i'll be rich. one day i'll buy a bigger house and that will come in handy. why should i get rid of it? >> one thing it creates, we end up talking about this a lot in terms of the front end effect. its effect on individual homeowners. you have all these incentives, this tax deduction to fannie mae and freddie mac who get people on the margin of renting and buying and even before that
margin when they should be renting to buy and that creates a different world for the industry. you build a lot more houses that are to be bought instead of to rent. so even people who want to rent end up not being able to find the housing stuff that you would need to raise a family particularly in a lot of urban centers and then you end up having a situation where they need the mortgage interest tax deduction and fannie mae and freddie mac and the politics of it begin to feed on it self such that homeownership becomes absolutely, you know, entrenched as this incredible bias in american public policy. >> right. it's like if one person stands up at a stadium they're fine but when everyone stands off, no one is better off. mortgage interest deduction going into the housing market raises prices in such a way that it kind of gets eaten into whatever benefit you got in the first place. kind of like the health care deduction. this is a state where that accidentally became very
important. it actually was never designed as a specific housing program. it fell into the code when it was adopted. i think studies are clear it doesn't actually benefit homeownership. most of it is soaked up at the very top end in part because you have to deduct. the more you pay in taxes, the more the benefit is. >> if you take the standard deduction you don't get it. >> yes. and if you have a huge mortgage payment you get more value out of it. so kind of like health care deduction. it's something that becomes central to how we -- employer provided health care deduction is central to how we see middle class life and we will have to approach it to scaling back and slowly rolling it back over years which i think is becoming a concensus approach. >> and shahein, you're very engaged in this fight going on in congress. is there an actual prospect for anything to happen in congress? >> no. no. i'm sorry to be so blunt but there's nothing that will happen before 2014. i mean, there are too many
differences between the democrats and the republicans. not only that, there are too many differences between folks in the republican party, between senate republicans and house republicans, between tea party republicans and those who are more friendly to corporate interests. there is virtually no prospect for anything advancing before the 2014 election. largely this is an intellectual debate where we start the discussion and hope to pick it up some time after 2014, maybe before 2016 but, honestly, who knows? >> well, we do like intellectual discussions here on "all in." heidi from "the guardian" and mike from the roosevelt institute and shahein from "the huffington post." that is "all in" for the evening. good evening, rachel. now i feel i have to live up to that. no pressure. thanks to you at home for staying with us for the next hour. all right, fayetteville, north carolina. in fayetteville, north carolina, downtown, just off campbell avenue, jackie burden and michael james, these two people, were walking down the street on december 7, 1995. and while they were walking down the street, they ran into three u.s. soldiers. they were all members of the 82nd airborne stationed nearby